The Upper Tribunal has allowed HMRC’s appeal in this case concerning the provision of stalls and pitches at organised events.
The taxpayer organises craft and garden fairs/shows. Spaces are sold to businesses and individuals to enable them to sell their products. The taxpayer accounted for VAT on the entrance fees it charged to members of the public but exempted the charges made to stallholders. HMRC argued that there was a supply of a right to use land, but that this formed part of a single supply of ‘the organisation of a craft or garden fair at which stallholders are able to exhibit their wares for sale.’ The earlier First-tier Tribunal (FTT) based its decision on the contracts between the parties, concluding that the contracts did not impose an obligation on the taxpayer to organise the fairs. Relying on Secret Hotels2 Ltd, it decided that there was a single exempt supply of a licence to occupy land. The Upper Tribunal (UT) has concluded that the supply is a single, standard rated supply.
The UT started by considering the contract. The taxpayer argued that the FTT was correct to conclude that there was nothing in the taxpayer’s contract to oblige the taxpayer to organise a show. The UT disagreed, finding that a stallholder did not just get a plot of land, it got a stall or pitch at a specified event to sell goods. The UT highlights a number of clauses to support this view (paragraph 39) including a clause allowing the taxpayer to cancel the show. This infers that the taxpayer is otherwise obliged to provide a show. The UT concluded that the terms and conditions would convey, to any reasonable person, that the taxpayer was promising that there would be an organised event. This, the UT concluded, was the economic reality.
Single v multiple supply
HMRC argued that there was a single supply and this was not contested by the taxpayer. The key question was the liability of this supply.
The UT dismissed the taxpayer’s argument that, even if there are other services, the fact that they are not sufficiently defined in the contract supports the conclusion that there is a principal exempt supply of a right over land. The UT agreed with HMRC that sellers received high-quality, expertly organised and run events, one element of which is the provision of a pitch. Referring to Temco, the UT also agreed with HMRC that the taxpayer’s activity was not relatively passive, was not linked simply to the passage of time and that it did generate significant added value. The UT noted the similar approach in the International Antiques and Collectors Fairs FTT decision.
The UT concluded that the supply to the sellers could not fall within the land exemption and therefore is a standard rated supply.
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